PFMT - Earnings call transcript Q1 2024 | Performant Financial Corporation

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Operator

Greetings, ladies and gentlemen, and welcome to Performant Financial Corporation First Quarter 2024 Earnings Call. [Operator Instructions] This call is being recorded on Tuesday, May 7, 2024. I would now like to turn the conference over to Jon Bozzuto, Head of Investor Relations. Please go ahead.

Jon Bozzuto

Thank you, operator. Good afternoon, everyone. have company's copy first should release the you the for quarter now, received of a earnings By XXXX results.

not, of today's Ramchandani, Chief have Investor Kohl, Chief -- you a Officer. and available Simeon is If Rohit Officer; on will Relations be portion we our call, On Financial Executive website. will be copy the

subject our the Before during to company's These made on comments we of some the statements. including uncertainties, I'd begin, and results those filings forward-looking call, risks like differ financial including those that statements the described are to from call. materially are SEC. remind you in may guidance, today's the described Actual with

the the are update in to release. I this made turn call of the discussed to on statements addition, based attached the expectations. any reconciled new would forward-looking circumstances to table In or measures to during all directly today, press forward-looking as call measures all Kohl. Simeon non-GAAP our to financial comparable revised Sim? statements company GAAP are and Also, like over undertake does now not most

Simeon Kohl

you, everyone, Good thank you Jon. joining for our call. Thank us and earnings for afternoon,

first Rohit prospects, will and remainder walk you confidence then quarter with encouraged our by year. are I results. our the of We pleased reiterate expectations are operational our which and accomplishments, our the us the gives results to for will financial share through

we dive as needs tailored client-centric order large innovative implementations result Core that payment as with future. well their first recognize approach. partner into integrity optimize today I our in to highlight double-digit into that programs of our to strategy. at client-centric has of as for been our execution and XXXX, Performant need to first consistent clients growth and growth revenue and we disciplined technology-driven means the strategy build our each our our quarter to year-over-year addressable double-digit be the quarter the our Our results. Being to of market. are penetrate and we will respective We

the led an and in Our clients. I were and first additional clients team expansion on to and having between tell opportunities our enduring of partnership implementations million a XX has revenue basis, partnerships. existing within shifts new $X implementations expected quarter, testament completed generate collectively is and services commitment annualized existing as to of acquiring value clients often $X evolves, rewarding, new the the to that our million Performant is all within market but our to ability to XX cultivate certainly

care these decision-making. the a this and of that recent influence of of work heart complex industries that of consistent is proof health serving to navigate When performance results-driven clients the cadence is proposition. value Our navigate numerous Amongst while client-centric payment instability, the delicately effectively the landscape, integrity abrasion. change provider our navigating our lies relationship. Throughout at strain minimizing implementations care challenge disproportionately factors complexities Partnering approach culture outage, clients. with are with the period health provider clients also the to our the situation we payer

restarted. then the Performant experienced cycle to claim continue weeks Certain on are impact processing decreased should We several claims that that of temporary. the life early see levels of volume, products evidence in to introduced the outage but normal as be return

volumes. clients, catch For we some quickly can up on

impact, redeploy few to productive may catch a inventory to minimize resources that there for work would and we others, up volumes. will us take longer be to on For age

clients growth in to well continues expansion coming board. addition perform Certain in the first significant with business Our of clients have eligibility new commercial quarter. X% shown to on

MSP contain avoidance solution cycle, solutions premium and client-centric headwinds, in MCO's Demonstrating costs. Furthermore, Advantage we suitable reduction including new that avoidance amidst in Leveraging as industry and of faced benefits our success identifying Star Advantage avenue Medicare has leveraging our challenges. Medicare into cost Medicare MCO offerings which clients solution, payment proven eligibility to launched cost we've payer, further has in our data expansion supports Advantage industry to rates, assets on premium an Ratings plans. our partners pressure certain with within Advantage successfully commercial has coordinate noticeable response business additional earlier each approach, robust MSP in putting to for programs we Medicare identified and seen by operating challenge quickly many the most the market. expertise the our successful. adjustments the requesting reimbursement Our to this

continued Our been understand our dividends growth. that needs ability reap will and this CMS to as scaling our and continue MSP also the I confident am has the driving business progresses, to story welcome X of contract. closely diversification implementations approach with strong, audit to for their growth client has to headwind evolving growth offset through been quarter while performance a our clients commercial product RAC long-standing first providing a work instrumental of clinical CMS in our XX% strategic increase the contract. Demand Region in with

scope collaboration capitalize began a efficiency select enabling operational we strategic to communication. group optimize reconfiguring have readmission data their This This streamlined resources. business. In clients this factory discussed audit-based of Encouraged to allocation experience, well. them with and in on quarters, the continue by audits. optimize audits workflows, gains also workflow only of a more not but include with to clients clients, outcomes, previous efficiency, our We expanded shift offers our as enhances effort outpatient segment with our to and exchanges primarily larger of we've the client our

of Turning Performant. clusters machine to score The And RecordsOne existing improve our process AI Performant's technology workflow more its higher technology uses identity quickly use core to to advanced ingest enhance while today findings to ability Cutting-edge those team of natural likelihood both audit the language large language score and learning case technology addition without. identifying models and claims, to and as been our that incorporates of this realize I'm to and centers around efficiency. manage licensed and and effectively the those uses equally our has important, potential strategy. of and processing. We've welcome previously with data, amounts RecordsOne large technology and accuracy piloted to to technology excited a technology. large our

we how extract are processing quickly. We information We teams outcomes. empower believe exploring accuracy to amount technology We technology time rich data data current Performant's the our coders expand benefits medical should technology natural may able assess through records. more well and now this the believe this numerous to perhaps spend with more map. its existing of with AI beyond nurses from combing improve provide see audit couple strategic the also technology road clinical review We bringing and this necessary new pertinent development will claims opportunities guide assets to numerous and in-house. to platform Performant's technology language our of teams speed can which importantly, review a to clinical significant scope and being the Today, with align

principles and and in this technology-enabled of driven afforded results centricity client Our solutions industry. us have core unique credibility

significant We inroads commercial opportunity. our payers, largest with continue to make

with can a in is rely our possible credibility information operations through and for expanded a robust and opportunity the market well-proven significant made solutions, also one upside. space Medicaid be competitive adaptable security to new infrastructure new clients our This on. workflows our only that have highly state market, Performant, state bolstered and We

by of state the one RAC compete awarding audit ability October contract was of Our to their largest us programs, York, Medicaid illustrated Medicaid recovery New in XXXX.

It proposal. The While including overturned, qualifications. in on and that RAC, however, reissue a was our is was the so State to Performant's based decided relating news, capabilities RFPs, was TPL the good all or subrogation. the protested not that a reference cited and York has containment award cost ultimately New do decision to technicality to X we

We opportunities, applying our TPL lessons pursuing original the proposal actively are learned RAC the from submissions. and

value confident for While to holds. outcome once significant we our to our we and protest in potential partnership State enthusiasm state overall the we're the New other was this York Meanwhile, of services maintain continue the RFPs, and to again. ability pursue unfortunate, market demonstrate

value Our crucial anticipate are XXXX. It's driving note stands. to financial of technology client have growth, are metrics culture aspect a growth which one commitment not centricity just throughout innovative our quarter integral principles strong These just we Performant's our proposition in that instrumental been that also bedrock first is to narrative. the continuing our and trend to on

growth Our promising Rohit financials. it the future. With strategic for are discussion approach aggressively Chief excited has future new our for Ramchandani, a improved charging and and Rohit? pursuing about the to market for I'll opportunities that, opportunities. I'm our Financial efficiency. hand implemented We've over standing new of present trajectory Officer, our the we're

Rohit Ramchandani

Sim. Thanks,

million, of care mentioned, which first Sim XXXX. encouraged we health the in by included were the $XX.X Total our results of million. revenues quarter As $XX.X quarter company revenues in are

with is the of million last $X.X for quarter, our accounted this business decline which during services business. outsourced line a expectations year, from care customer for Our revenue the in

quarter the but remain expect We second are this a to within beholding the this first potential conservative market. quarter. Last grow, results regulatory having to about turbulent to quarter, our we environment to with business this spoke as we we in business remain expectations flat the

care. Turning health to

Our year-over-year, displaying first quarter around all revenues grew roughly solid XX% growth.

MSP in Sim highlighted, roughly anchor newer to market for Our These an quarter the growth helped way, contract. that increase eligibility X%. Commercial of revenues, products to eligibility as care markets and were representing our relevant $XX.X through are adoption CMS long-standing health led the of million within clients first of the scale trends. the offset

$XX.X positive CMS performed the government almost as particular leverage representing to have existing clients, We perform we also Region X implementations in expect continued claims we we grow. especially quarter line as revenues continue known well, million, as results from to first also were within our Commercial our a learnings relationships. Within an in of in our best-in-class to expectations. Government overall with continues XXXX well operations our of feel business, as base scaled RAC as increase XX%. auditing, commercial claims offering, long-term

acquisition will commercial XXXX. We expect RecordsOne. We previously technology adding in assets having our growth, state further initiative, itself venture steady first implemented with I've believe the enthusiasm from of from our continue of latest bolstered in XX quarter still contract efficiency efforts our project of that through for As our claims to maintain robust ahead. be language of noted, technology offerings all which opportunities bear late will schedule Turing natural from hit processing a the based fruit we to this

clients. existing mentioned, with Sim of are XX statements new work As all

within have significant lies stemming that land-and-expand previously opportunity from a growth our detailed deal our great clients, with of approach. We strategy a commercial most

believe relationships this X we top of have of proposition value X implementations that validation with plans, commercial came clients. XX quarter the existing from existing and it's a all strong We continued our

that those of for outlook the the annual our did We momentum XXXX XXXX these carrying million. $X annual implementation maintain to contract value million estimated with to from or contract value estimated implementations QX implementations is we surpass Our an $X million. match in $XX of promising,

we the want And in our through In but project I expand our to asset efficiency to technology, solutions. I by the encouraged revenue the conversion partner IT into addition key of for maintain gains. a of pace as the technology growth, RecordsOne Turing the initiative. teams commitment I'm margins of touch scale discussed, acquisition. from details won't Sim performing rehash the early care that health of dynamics a do to and on

the overall term. This to Turing quarter reduce the make IT on streamline efficient. stated IT the that long into short our expand included spend intentionally I our we ultimately to workflows As efficiency fits improvements in term more project strategy increase call, to squarely in footprint as acquisition fourth and

first and to fit investments growth and driven our sales ultimately record without transaction opportunities. Shifting with or continue tackling deal the organic structured quarter compared higher our hand well credit million within to $X further marketing ability We needs and drive was as These as to feel represented facility by comfortable current last on this operating the between sacrificing having Fargo, in capital increased to Wells quarter the $XX.X have cash implementations financed expenses. scale first to growth. of primarily to spend roughly This the million year. our into strategically

led $XXX was for health million by slightly revenue in guidance range care $X million. $XXX million. be the the ahead range XXXX to be $X confident year million negative revenue year, growth. We for in approximately to million. was for Full feel to of period. EBITDA million, reiterating of our be the to $X.X company the the This expectations, in of revenues full ahead adjusted prior between Our quarter million $X.X million and EBITDA of $XXX And adjusted to $XXX

implementations. of between development, into quarter, discrete project investments $X.X our in last we business top our the add investments contract typical $X As operating still mentioned Turing and are track on increased million on and to million sales spend to in

have pure the to efficiencies strong ago hit tactical renegotiate self-sustaining these that decision a company, this opportunities would pipeline and point the and and cash EBITDA ahead from we we diligent continue we will a efforts to made that care become our investments. We of year expect and the a inflection health a excited expanded an play implementations reap of cash We in come later scale us, are years flows. sales were to to to X point next. revolving to support inflection safely adjusted flip credit growth facility We and until

continue our positioning we up you and feel footprint questions? revenue about today. Operator, the confident capital increase line We to have for ability expand to structure with market our please our will and open

Operator

Group. is Our Craig-Hallum Instructions] [Operator with Sutton first question Capital from George

George Sutton

results. Nice

just of speed spend revenues what talk that So XX for less all quarter normally Can incrementally your would relative you be to your your new what existing were this you and clients? means that to about implementations mentioned clients.

Simeon Kohl

to take that? want you Rohit,

Rohit Ramchandani

Sure.

a just And IT I massively initial also given But clients view So Yes, correct. of then that's have the would less that less spend a I'll faster, in integration take anything a the dynamic us because IT be reminder of new as would folks these. compared question as we're are larger work part time. it the skipping incremental for net little of you that -- on to integration with terms initial of second in bit we some do. implementation wouldn't the terms and of working there's of save would to There a little first.

Simeon Kohl

new of I beholden Yes, to onboarding again, go Rohit's the much good in a accounted through et But news think, making for going of clients. is the of we -- think that the times, things, those ramp sure is they're to are certainly types policies, net we that through that kind effort quality point, still about client client data, within with when terms George, we the existing all cetera. expansions that of checks, of these

So still go faster kind to definitely various gates. we new but through bit a have it's a than client, net that things those gates, quality of

George Sutton

you like the health That's lot Can we the up recently. here? market of priority working side. So a just about were were new you animated middle very for with on an update that seen new from a middle that They impact they've webinar on opportunities. look opportunities give you a the historically we've about talked what effort offering market as us on

Simeon Kohl

Yes. And priority, excited. are we Yes. specific too

We have -- it's been a fantastic partnership.

that we as kind numerous showcase perfect think such of opportunity about payers clearly in able having we're having that to to be trying on to is implementation the the about success of We're sales look, broad I working helping and talked that, a few relationship we're the opportunities. a calls, that. But other through type prior thinking with where pipeline. of

real more in of versus seeing that terms waterfall a traditional begin And having programs so gate we're to priority different broad also opportunities of for the competitors, of those the opportunities easily out just plan other are needs of and that a to that seeing similar talk resonating not large of and to the the as are have some that emerge our expansive they cadence. We're well. how bespoke mid-market about story by addressed opportunity some is dynamics

initiatives. us the leveraging is about in well, relationship it in as our and So working it's helping definitely we sales think general, quite

George Sutton

I that claim is you've were that little of you certain just a -- X there their to finally, just and wanted a volumes. mentioned then clarity And sounded I had clients Okay. things new on increased me that increase kinds more wanted I'm you you of offerings. little that are see? if cost and give specificity And then offerings can a there, if bit what us could just -- those of impact kind more what you sense avoidance new could. And mentioned you

Simeon Kohl

Yes.

cost you new offerings the So the we the eligibility think if side, on side. that about on have it's avoidance

ultimately that the to paid So those eligibility wrong and get where identify today, use matching responsibility are primary paid, data we go our clients. claims and but party from other have right? back to technologies the our where dollars making majority identify then coordinate, great another of So a we offerings bill, sure been we assets, ahead payer there's the our we identify, that party,

members that work there environment. coverage cost their sell avoidance are is for that we actually The And we've as few and so in a to data to now them and refer those we through process postpaid kind a been the can flags. last through building where that, show that's of assets We well-established where go out it for other demonstrate, years. plans

be to can we able clients. proactive with so payer And that our share coverage and be

the and allows do have end, that to actually and chase them pay coordinate so to on front this payments kind don't of you And so the environment.

testament growing again, what that's proficient. And more are we've data becoming technologies how think are I so really been more about assets are matching our and to a talking and

So the of we're terms to we offering excited in diversification solutions about about quicker terms speed postpay. how think that. eligibility in revenue a of little It's a bit side, those the nice product versus on

that. And to types more that really see access up, happy We're of us clients of types seeing look expansion claims So the that the payments getting claims different are to claims. that opportunities at of it's more kind different expanding point about -- volumes just within opportunities as we I'm clients spend. you I of broader can volume larger to bring as we just think of sorry, just think for audit

Operator

from Lake Stephan Jacob Street with Our Markets. question is Capital next

Jacob Stephan

past first in that existing one of just commercial I been expansion talk this of Maybe on kind you quarter about were of the expansion guess, like XX elaborate the it's It existing maybe well. kind where sounds versus as of clients? quarter kind what quarters? the saw new we historically just was kind Could to Congrats all payers. on further customer on

Simeon Kohl

Yes. think concern that I And It anything stretch. that's should look, by be us -- whatsoever. that's concerning don't doesn't any

there's We a as see I sales pipeline. into the think about as their consistent and previously, well through the way number still are Rohit working of pipeline talked implementation flows. ebbs logos that new

there. concern no So

the and quarters healthy seen I think of Rohit existing this a have points what have expand with relationship land whether we've of the payers, expand. of the when those and lives just covered or lot implementations and there as that moon a there. might you you clients for opportunity aligned top a as was to lot of But always out, strategy. one stars priorities X of and per amount it's X And there's a

So going that's big be a to of strategy. always part our

be about. We new anticipate So implementations we'll logos contribute going nothing to fully that a concerned quarterly to definitely of number our forward. see those

Jacob Stephan

Yes. Understood.

Okay. for to kind here. maybe couple just important specifically, business into is the point implemented could due Maybe of on RecordsOne touching And things of Performant? What your just acquisition more most fully of this then here. you if a when kind

Simeon Kohl

Sure.

space same well abrasive their protecting bit for that So the look, continues fact differentiator to use about not and own talk here quality providers of their highest and to that core been is has scores aligns being receive with their networks. trying the stack time, our in the the this to us. are are we for they payers at how we sure objectives quite and really that make too significant Performant dollars, It some time a of that a with technology some

issues key highest is select so have this that And of errors or the in billing can degree claims space. that technology that likelihood a the there's having

You to wide cast want nets. don't

in we cetera. And in-house investing high make coming You want have finding doesn't are we not same selecting vendor, high when capital as We returns, sure a that key just a yield. contingency the that to don't objective. that human a invested, to et Performant appeal appeal, want have of aren't that areas are capital human have going to we have that's we're have claims for

So we've technology help can improve that have always known, those selections. us really

we had processing, we through sure leverage Rohit some really that game of It selection as the pretty best-in-class RecordsOne, that models, have think capability. time. And dramatically for it's to the learning machine language another that large I natural level. make can takes language we've points up out,

workflow. clients. And can about moving I much kind again, where a it that as in -- of review. language workflow, the I have execute review. to possible. about technology lot using that to natural that our of nurses and our degree through capital don't likelihood, areas an the a we think review step for through help to components of coders even be say are of lower of processing, technology today, think we are as very the the that, we're a to technology through capital. I has of human full careful, any components good technology to make are leverage where about we so as industry, lower think human to et And that that environment as There's need the is investment. to us a good review going to to There bringing in that, human to the use actually we components in to move we're review forward, this technology things, before But instead cetera, payer be not we in there to there claims as that higher happen that help of yet being actually then for that finding, some is certain right? which a technology the you can have able execute us of us, And you

Jacob Stephan

commercial I based? of kind of to eligibility Yes. on kind the eligibility like side just last the I continues What's helpful. it lead touch excel Okay. here. just that's on No, the guess, of segment, there? one you But -- what's way The could sounds kind me guess of there. going government one for

Simeon Kohl

Sure.

and at stab a some then provide don't narrative? that So Rohit, why I'll you take

Rohit Ramchandani

Yes.

is a it And as [indiscernible] unique So for XXXX. other us with truly so relationship is that we've say it. one, to going contract was that contracts, sole vendor government what for had the for single I national since

in early you'll in grew Trust We you see if But to is last hitting terms relationship. that at of way off steady that of really unlocked. there more look volumes that contract, lot within public some Medicare that in or a and bit a on a years. recoveries contract our has year that performance those could so, so the on the reporting and brought be the the more state. And it And leveled opportunities of

hit state a 'XX. available that hindrance steady a thing contract, end today then rate. And becomes you first on growth a new contract would that near of over of as more then I from one just I the what's and is other which think ran QX a mention if of on about that we've think the year-over-year XXXX to 'XX, took

contract, economics, And SLAs, new at new so new sort of cetera, et play.

Operator

turn reached have would our like to I for closing conference over of back We our question-and-answer the CEO, remarks. the end session. Kohl Simeon to

Simeon Kohl

you, today's who everyone like call. for our I'd all their support. to investors on thank our our and their to joined nearly also X,XXX operator. like for express team work gratitude members this continued I'd to Thank quarter hard

optimistic performance our remain the and opportunities about ahead. with pleased quarter, our are We we in

to a providing So call. forward -- thanks Have and again, we on quarter's a progress evening, everyone. great everyone look next the during

Operator

conference. you. This conclude today's will Thank

participation. thank You lines may at this time, and for disconnect your you your

Performant Financial (PFMT) 7 May 242024 Q1 Earnings call transcript